Oil Pushes Higher as China Data Beats and Russian Refineries Hit

(Bloomberg) -- Oil ticked higher following the biggest weekly advance in a month as macro-economic data from China came in ahead of expectations, and Ukrainian attacks on Russian refineries heightened geopolitical risks.

Global benchmark Brent rose toward $86 a barrel after gaining 4% last week, while West Texas Intermediate was above $81. China’s factory output and investment grew more strongly than expected at the start of the year, figures on Monday showed. The country is the world’s largest oil importer.

In Russia, meanwhile, drone strikes over the weekend hit multiple plants, some deep within the country’s territory. Diesel futures are higher for a third session. The attacks came as Vladimir Putin swept to victory in a presidential election.

Crude has broken out of a tight trading range that dominated the opening months of the year, with prices recently hitting the highest level since November. The advance has been underpinned by OPEC+ cutbacks to production, and predictions for a global deficit this year. Reflecting the shift in tone, banks including Morgan Stanley have been nudging their oil-price forecasts higher.

“The strikes on Russian refineries added $2 to $3 a barrel of risk premium for crude last week, which remains in place as we start this week with more attacks over the weekend,” said Vandana Hari, founder of Vanda Insights in Singapore. Still, with a US monetary policy decision due this week, “economic sentiment could return to the center stage for the oil complex.”

Oil’s timespreads suggest that conditions are tightening. The gap between Brent’s two nearest December contracts — the one for this year and its counterpart in 2025 — widened to $ a barrel in backwardation, a bullish pattern. That’s up from $2.66 at the start of the year.

Crude’s latest leg higher has been accompanied by a jump in the number of outstanding contracts, known as open interest. Holdings have surged to the highest since October 2021, with a gain seen toward the end of the last week.

In the coming days, traders will get a host of market insights from the CERAWeek conference in Houston, which starts on Monday. Among speakers scheduled on the opening day are the chief executive officers of Exxon Mobil Corp., Saudi Aramco, Shell Plc and TotalEnergies SE.

The US Treasury Department, meanwhile, sanctioned another tanker. This time, it was the Marshall Islands-flagged Lady Sofia, which the US says was involved in shipping Iranian commodities in support of the Yemen-based Houthi militants.

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